Nightstar Therapeutics Plc ADS (NASDAQ:NITE)
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Knight Capital Group Announces GAAP Loss of $0.04 Per Diluted
Share for Second Quarter 2005
GAAP loss includes $0.04 per diluted share of non-operating real estate and
regulatory charges recorded within the company's two operating business
segments, Equity Markets and Asset Management
JERSEY CITY, N.J., July 20 /PRNewswire-FirstCall/ -- Knight Capital Group,
Inc. (NASDAQ:NITE) today reported a GAAP loss of $4.2 million for the second
quarter of 2005, or a loss of $0.04 per diluted share.
For the second quarter of 2005, the company recorded charges of $4.2 million,
net of tax, or $0.04 per diluted share, including $2.7 million, net of tax,
relating to real estate charges and a writedown of fixed assets for its 525
Washington Boulevard facility; and $1.5 million, net of tax, relating to
regulatory and related matters. Excluding these charges, the firm had a net
operating loss from continuing operations of approximately $100,000 for the
second quarter of 2005. Included within the net operating loss for the second
quarter of 2005, the company recognized a gain of $6.1 million, net of tax, or
$0.06 per diluted share, relating to its investments in The Nasdaq Stock
Market, Inc.
For the second quarter of 2004, the company reported a GAAP loss of $47.9
million, or a loss of $0.42 per diluted share, which included a net loss from
continuing operations of $51.6 million, or a loss of $0.46 per diluted share,
and income from discontinued operations of $3.7 million, net of tax, or $0.03
per diluted share. During the second quarter of 2004, the company recorded
charges for excess real estate capacity, writedowns of fixed assets and
regulatory and related matters of $58.0 million, net of tax, or $0.51 per
diluted share. Excluding these charges, the firm had operating earnings from
continuing operations of $6.4 million, or $0.06 per diluted share, for the
second quarter of 2004.
"Continuing operations" include the company's two operating business segments,
Equity Markets and Asset Management. Continuing operations also include a
Corporate segment, encompassing corporate investments and overhead expenses.
Amounts reported as "discontinued operations" include the company's former
Derivative Markets business segment, the sale of which was completed to
Citigroup at the close of business on December 9, 2004.
Revenues for the second quarter of 2005 were $114.1 million, compared to $140.0
million from continuing operations for the second quarter of 2004.
"Knight had a rough start to the second quarter, but we worked hard to narrow
losses through June and we continue to regain ground so far in July," said
Thomas M. Joyce, Chairman and Chief Executive Officer of Knight Capital Group.
"Miserable market conditions in April and May impacted profitability in both
our Equity Markets and Asset Management businesses. During those challenging
months, Knight management made some of its most far-reaching and considerable
changes to date to the broker-dealer business as part of the ongoing effort to
counteract revenue capture decline. The company dramatically increased its use
of automation and instituted pricing structure adjustments that included a
significant reduction in payment for order flow on Nasdaq, S&P 500, listed and
Bulletin Board securities."
Q2 2005 Q2 2004
Revenues ($) 114,096,109 140,036,160
Net loss from continuing operations ($) (4,210,577) (51,597,576)
Income from discontinued operations,
net of tax ($) - 3,736,622
Net loss ($) (4,210,577) (47,860,954)
Diluted EPS from continuing operations ($) (0.04) (0.46)
Diluted EPS from discontinued operations ($) - 0.03
Diluted EPS ($) (0.04) (0.42)
U.S. equity dollar value traded (in $ millions) 445,808 416,798
U.S. equity trades executed (in thousands) 48,150 49,058
Average daily U.S. equity trades (in thousands) 752 791
Nasdaq and Listed equity shares traded
(in millions) 25,363 28,936
OTC Bulletin Board and Pink Sheet
shares traded (in millions) 154,050 376,142
Average revenue capture per U.S.
equity dollar value traded (bps) 1.5 2.5
Average month-end balance of assets
under management ($ millions) 3,268.5 2,895.1
Quarterly fund return to investors* -1.3% 0.1%
* Quarterly fund return represents the blended quarterly return across
all assets under management in the Deephaven funds
YTD 2005 YTD 2004
Revenues ($) 251,652,980 338,355,625
Net income (loss) from continuing
operations ($) 1,809,356 (25,619,746)
(Loss) income from discontinued
operations, net of tax ($) (265,927) 9,604,387
Net income (loss) ($) 1,543,429 (16,015,359)
Diluted EPS from continuing operations ($) 0.02 (0.23)
Diluted EPS from discontinued operations ($) - 0.08
Diluted EPS ($) 0.01 (0.14)
U.S. equity dollar value traded (in $ millions) 916,483 921,413
U.S. equity trades executed (in thousands) 100,999 108,650
Average daily U.S. equity trades (in thousands) 808 876
Nasdaq and Listed equity shares
traded (in millions) 54,462 69,863
OTC Bulletin Board and Pink Sheet
shares traded (in millions) 449,849 696,708
Average revenue capture per U.S.
equity dollar value traded (bps) 1.6 2.7
Average month-end balance of assets
under management ($ millions) 3,375.3 2,432.6
Year-to-date fund return to investors* -0.2% 2.1%
* Year-to-date fund return represents the blended return across all
assets under management in the Deephaven funds
Equity Markets
During the second quarter of 2005, the Equity Markets business segment
generated total revenues of $98.5 million, compared to $131.1 million in the
second quarter of 2004. In the second quarter of 2005, the Equity Markets
business segment reported a net operating loss of $1.1 million, compared to net
operating earnings of $9.4 million in the second quarter of 2004.
On June 16, 2005, the company announced the completion of its acquisition of
the business of Direct Trading Institutional, Inc., a direct market access
firm. In connection with this closing, the company made an initial cash payment
of $40.0 million and recorded goodwill of $20.7 million and intangible assets
of $20.0 million.
Asset Management
During the second quarter of 2005, the Asset Management business segment,
Deephaven Capital Management, generated $8.0 million in asset management fees,
compared to $8.1 million in the same period a year ago. In the second quarter
of 2005, the Asset Management business segment reported a net operating loss of
approximately $500,000, compared to net operating earnings of $1.3 million in
the second quarter of 2004. Asset Management had approximately $3.4 billion
under management at June 30, 2005, down slightly from the $3.5 billion under
management at March 31, 2005, and up from $3.2 billion at June 30, 2004.
"As we start the third quarter, each business has established clear priorities
and operational goals," Mr. Joyce said. "We continue to adapt and enhance our
broker-dealer operations to meet new regulatory, market and competitive issues.
Knight is very committed to remaining an industry leader serving broker-dealer
clients. We believe the institutional equities business remains a growth
opportunity, and we are confident that Knight's strength in listed market
making and in small-to-mid-cap stocks will continue to drive our penetration of
the institutional market. Moreover, as Knight integrates our new Electronic
Services group, we'll see new opportunities to offer direct market access
through Direct Trading Institutional, as well as ECN trade executions and other
products and services. And finally, Deephaven continues to expand its offering
by adding new single-strategy funds.
"In July we're experiencing an early summer rally, and the operating
environment looks encouraging over the short term," Mr. Joyce added. "The
strategies that Knight implemented in the second quarter, combined with
somewhat improved market conditions, are having a positive impact on the
profitability of our equity operations. Meanwhile, Deephaven started to see a
rebound in returns in late May, which carried through the end of the second
quarter. Our enthusiasm is tempered only by the need for greater economic
recovery, including lower oil prices and stability in interest rates. We also
can't rule out that the seasonal summer slowdown may simply arrive a little
later than usual this year."
Corporate
In the second quarter of 2005, the Corporate segment reported net operating
earnings of $1.5 million, compared to a net operating loss of $4.3 million in
the second quarter of 2004.
The company's investment in the Deephaven funds lost $1.7 million, net of tax,
during the second quarter of 2005, down from earnings of $300,000, net of tax,
during the second quarter of 2004. At the end of the second quarter of 2005,
the company had $227.2 million invested in the Deephaven funds. On July 1,
2005, Knight invested an additional $40 million in the Deephaven funds,
bringing the total corporate investment to $267.2 million.
During the second quarter of 2005, the company recognized a gain of $6.1
million, net of tax, or $0.06 per diluted share, relating to its investments in
The Nasdaq Stock Market, Inc.
The company had $794.9 million in stockholders' equity as of June 30, 2005,
equivalent to a book value of $7.25 per diluted share. As of June 30, 2005,
the company had $236.5 million in cash and cash equivalents and a $227.2
million investment in funds managed by Deephaven, its Asset Management business
segment.
During the second quarter of 2005, the company repurchased 4.0 million shares
for approximately $32.9 million under the company's $320 million stock
repurchase program. To date, the company has repurchased 32.3 million shares
for $252 million. The company cautions that there are no assurances that any
further repurchases may actually occur.
On July 11, 2005, the company filed an SEC Form 8-K to announce its decision to
correct its method of accounting for property lease transactions, and to
restate its financial statements for the years ended December 31, 2002, 2003
and 2004, included in the company's 2004 Annual Report on Form 10-K. The
interim financial statements included in the company's Form 10-Q for the
quarterly period ended March 31, 2005 will also be restated. Accordingly, the
unaudited financial data in this release reflects the restatement of these
prior periods.
Copies of this earnings release and other information on the company can be
obtained at the company's Web site, http://www.knight.com/. The company will
conduct its second quarter 2005 earnings conference call for analysts,
investors and the media at 9:00 a.m. Eastern Daylight Time (EDT) today, July
20, 2005. The conference call will be Webcast live at 9:00 a.m. EDT for all
investors and interested parties on Knight's Web site. In addition, the
company will release its monthly volume statistics for June 2005 on its Web
site before the start of trading today.
About Knight Capital Group
Knight is a leading provider of comprehensive trade execution and asset
management services. Our Equity Markets business offers institutions and
broker-dealers high quality trade execution and capital commitment across the
depth and breadth of the equity market. Our Asset Management business,
Deephaven Capital Management, is a market-neutral investment manager focused on
delivering risk-adjusted returns with low volatility for institutions and high
net worth individuals. Knight strives to be a valued partner by providing
superior service and continually enhancing its offering to meet client needs.
More information about Knight can be obtained at http://www.knight.com/.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the
Company's results as determined by generally accepted accounting principles
(GAAP), the Company also discloses certain non-GAAP information which
management believes provides useful information to investors. Within this
press release, the Company has disclosed its net income (loss) amounts for
certain reporting periods before charges, writedowns and discontinued
operations to assist the reader in understanding the impact of these charges,
writedowns and discontinued operations on the Company's financial results,
thereby facilitating more useful period-to-period comparisons of the Company's
businesses.
Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on current expectations, estimates
and projections about the Company's industry, management's beliefs and certain
assumptions made by management. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Since such statements involve risks and uncertainties, the actual
results and performance of the Company may turn out to be materially different
from the results expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. Unless otherwise required by law, the Company also
disclaims any obligation to update its view of any such risks or uncertainties
or to announce publicly the result of any revisions to the forward-looking
statements made herein; however, readers should carefully review reports or
documents the Company files from time to time with the Securities and Exchange
Commission including, without limitation, the risks and uncertainties detailed
under the headings "Certain Factors Affecting Results of Operations" and "Risks
Affecting our Business" in the Company's Annual Report on Form 10-K.
KNIGHT CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS*
(Unaudited)
For the three months ended For the six months ended
June 30, June 30,
2005 2004 2005 2004
REVENUES
Net trading revenue $27,051,166 $61,234,847 $64,472,995 $161,962,704
Commissions and fees 68,022,217 68,568,535 138,138,228 145,206,054
Asset management
fees 8,036,861 8,106,756 25,917,529 22,038,887
Interest and
dividends, net 2,216,039 771,956 4,555,840 1,629,917
Investment income
and other 8,769,826 1,354,066 18,568,388 7,518,063
Total revenues 114,096,109 140,036,160 251,652,980 338,355,625
EXPENSES
Employee compensation
and benefits 48,193,801 53,250,738 105,051,243 118,354,526
Execution and
clearance fees 23,348,038 28,682,313 46,894,821 66,444,613
Soft dollar and
commission recapture
expense 14,649,781 14,236,854 30,134,356 30,012,769
Payments for order
flow 3,582,088 9,843,017 10,986,162 22,861,456
Communications and
data processing 8,151,261 6,962,602 15,965,223 13,716,379
Depreciation and
amortization 3,734,419 3,560,345 8,036,831 7,480,028
Occupancy and
equipment rentals 2,829,725 4,388,032 6,947,116 8,736,809
Professional fees 4,550,021 3,950,860 8,331,745 7,307,132
Business development 1,707,779 1,825,410 3,001,115 3,868,379
Writedown of assets
and lease loss
accrual 4,545,895 2,623,986 4,545,895 2,623,986
Regulatory charges
and related matters 2,000,000 79,200,000 2,000,000 79,200,000
Other 3,425,759 2,189,722 6,079,506 4,938,852
Total expenses 120,718,567 210,713,879 247,974,013 365,544,929
(Loss) income from
continuing
operations before
income taxes (6,622,458) (70,677,719) 3,678,967 (27,189,304)
Income tax (benefit)
expense (2,411,881) (19,080,143) 1,869,611 (1,569,558)
Net (loss) income
from continuing
operations (4,210,577) (51,597,576) 1,809,356 (25,619,746)
Income (loss) from
discontinued
operations, net of
tax - 3,736,622 (265,927) 9,604,387
Net (loss) income $(4,210,577) $(47,860,954) $1,543,429 $(16,015,359)
Basic and diluted
earnings per share
from continuing
operations $(0.04) $(0.46) $0.02 $(0.23)
Basic and diluted
earnings per share
from discontinued
operations $- $0.03 $- $0.08
Basic and diluted
earnings per share $(0.04) $(0.42) $0.01 $(0.14)
Shares used in
computation of
basic earnings per
share 104,335,490 112,971,307 106,584,672 113,222,334
Shares used in
computation of
diluted earnings
per share 104,335,490 112,971,307 109,579,944 113,222,334
* Certain prior period amounts have been reclassified to conform to the
current period presentation.
KNIGHT CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
June 30, 2005 December 31, 2004
ASSETS
Cash and cash equivalents $236,483,470 $445,539,282
Securities owned, held at clearing
brokers, at market value 368,690,244 254,473,209
Receivable from brokers and dealers 791,509,982 244,881,065
Investment in Deephaven sponsored
funds 227,221,471 215,329,959
Fixed assets and leasehold
improvements at cost, less
accumulated depreciation and
amortization 63,773,595 54,382,503
Strategic investments 65,865,078 29,266,796
Goodwill 39,859,776 19,182,248
Intangible assets, less accumulated
amortization 31,235,694 11,546,528
Other assets 74,255,144 119,418,725
Total assets $1,898,894,454 $1,394,020,315
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Securities sold, not yet purchased,
at market value $321,559,724 $221,420,569
Payable to brokers and dealers 644,999,033 88,480,788
Accrued compensation expense 62,098,705 123,664,383
Accrued expenses and other
liabilities 75,343,647 109,252,681
Total liabilities 1,104,001,109 542,818,421
Stockholders' equity
Class A common stock 1,381,140 1,339,655
Additional paid-in-capital 463,490,454 427,451,712
Retained earnings 588,696,262 587,152,786
Treasury stock, at cost (249,944,718) (147,636,413)
Accumulated other comprehensive
income, net of tax 21,672,747 -
Unamortized stock-based compensation (30,402,540) (17,105,846)
Total stockholders' equity 794,893,345 851,201,894
Total liabilities and stockholders'
equity $1,898,894,454 $1,394,020,315
KNIGHT CAPITAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP DISCLOSURES*
Amounts in millions, except per share data
(Unaudited)
For the three months ended June 30, 2005
Equity Asset Corporate Discontinued Total
Markets Management Operations
GAAP NET (LOSS) INCOME $(3.7) $(2.0) $1.5 $- $(4.2)
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 2.6 - - - 2.6
Regulatory charges and
related matters - 1.5 - - 1.5
Net impact of adjustments 2.6 1.5 - - 4.1
NET OPERATING (LOSS) INCOME
FROM CONTINUING
OPERATIONS $(1.1) $(0.5) $1.5 $- $(0.1)
GAAP NET (LOSS) INCOME
PER DILUTED SHARE $(0.04) $(0.02) $0.01 $- $(0.04)
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 0.03 - - - 0.03
Regulatory charges and
related matters - 0.01 - - 0.01
Net impact of adjustments 0.03 0.01 - - 0.04
NET OPERATING (LOSS) INCOME
FROM CONTINUING OPERATIONS
PER DILUTED SHARE $(0.01) $(0.01) $0.01 $- $(0.00)
For the three months ended June 30, 2004
Equity Asset Corporate Discontinued Total
Markets Management Operations
GAAP NET (LOSS) INCOME $(48.6) $1.3 $(4.3) $3.7 $(47.9)
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 1.5 - - - 1.5
Regulatory charges and
related matters 56.4 - - - 56.4
(Income) from discontinued
operations - - - (3.7) (3.7)
Net impact of adjustments 58.0 - - (3.7) 54.2
NET OPERATING INCOME
(LOSS)FROM CONTINUING
OPERATIONS $9.4 $1.3 $(4.3) $- $6.4
GAAP NET (LOSS) INCOME
PER DILUTED SHARE $(0.43) $0.01 $(0.04) $0.03 $(0.42)
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 0.01 - - - 0.01
Regulatory charges and
related matters 0.50 - - - 0.50
(Income) from discontinued
operations - - - (0.03) (0.03)
Net impact of adjustments 0.51 - - (0.03) 0.48
NET OPERATING INCOME (LOSS)
FROM CONTINUING OPERATIONS
PER DILUTED SHARE $0.08 $0.01 $(0.04) $- $0.06
* Totals may not add due to rounding.
KNIGHT CAPITAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP DISCLOSURES*
Amounts in millions, except per share data
(Unaudited)
For the six months ended June 30, 2005
Equity Asset Corporate Discontinued Total
Markets Management Operations
GAAP NET (LOSS) INCOME $(10.3) $0.2 $12.0 $(0.3) $1.5
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 2.6 - - - 2.6
Regulatory charges and
related matters - 1.5 - 1.5
Loss from discontinued
operations - - - 0.3 0.3
Net impact of adjustments 2.6 1.5 - 0.3 4.4
NET OPERATING (LOSS)
INCOME FROM CONTINUING
OPERATIONS $(7.7) $1.7 $12.0 $- $5.9
GAAP NET (LOSS) INCOME
PER DILUTED SHARE $(0.09) $0.00 $0.11 $(0.00) $0.01
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 0.02 - - - 0.02
Regulatory charges and
related matters - 0.01 - - 0.01
Loss from discontinued
operations - - - 0.00 0.00
Net impact of adjustments 0.02 0.01 - 0.00 0.04
NET OPERATING (LOSS) INCOME
FROM CONTINUING
OPERATIONS PER
DILUTED SHARE $(0.07) $0.02 $0.11 $- $0.05
For the six months ended June 30, 2004
Equity Asset Corporate Discontinued Total
Markets Management Operations
GAAP NET (LOSS)
INCOME $(24.8) $4.9 $(5.8) $9.6 $(16.0)
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 1.5 - - - 1.5
Regulatory charges and
related matters 56.4 - - - 56.4
(Income) from discontinued
operations - - - (9.6) (9.6)
Net impact of adjustments 58.0 - - (9.6) 48.4
NET OPERATING INCOME (LOSS)
FROM CONTINUING
OPERATIONS $33.2 $4.9 $(5.8) $- $32.3
GAAP NET (LOSS) INCOME
PER DILUTED SHARE $(0.22) $0.04 $(0.05) $0.08 $(0.14)
Adjustments, net of tax:
Writedown of assets and
lease loss accrual 0.01 - - - 0.01
Regulatory charges and
related matters 0.50 - - - 0.50
(Income) from discontinued
operations - - - (0.08) (0.08)
Net impact of adjustments 0.51 - - (0.08) 0.43
NET OPERATING INCOME (LOSS)
FROM CONTINUING OPERATIONS
PER DILUTED SHARE $0.29 $0.04 $(0.05) $- $0.29
* Totals may not add due to rounding.
DATASOURCE: Knight Capital Group, Inc.
CONTACT: Margaret Wyrwas, Senior Managing Director, Corporate
Communications & Investor Relations, +1-201-557-6954, , or
Kara Fitzsimmons, Vice President, Corporate Communications, +1-201-356-1523,
, or Greta Morley, Vice President, Marketing
Communications & Public Relations, +1-201-557-6948, , or
Molly McDowell, Analyst, Corporate Communications & Investor Relations,
+1-201-356-1723, , all of Knight Capital Group, Inc.
Web site: http://www.knight.com/